CO129-361 - Public Offices - 1909 — Page 565

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No. 50.

Peking Syndicate to Foreign Office.--(Received November 26.)

Sir,

110, Cannon Street, London, November 26, 1903. IN continuation of my letter of the 28th October, with which was forwarded copy of a telegram from Mr. George Jamieson, C.M.G., from Shanghae, dated the 26th idem, T am desired by my Board to send herewith copy of a letter addressed to his Excellency Sir Ernest Satow by Mr. Jamieson, in which the very unsatisfactory results of interviews he has had at Shanghae with certain Chinese officials in connection with the settlement of the terms of the promised guarantee for the Tsechow-Taokow Railway are set forth. My Board desire to point out that the treatment accorded by his Excellency Shêng clearly indicates his intention to delay a settlement of the matter indefinitely, with probably the hope of ultimately evading the fulfilment of the promise made by Prince Ching to give a Government guarantee to this railway. This is of a piece with the treatment of the Syndicate's affairs by his Excellency Shêng in the past, and my Board realize that unless pressure is brought to bear by His Majesty's Government a settlement of the business now in hand will never come about.

As the negotiations with bis Excellency Sheng are now, as described by Mr. Jamieson, at a deadlock, my Board earnestly trust that His Majesty's Government will take such steps as may seem expedient to induce the Chinese Government to give immediate effect to the arrangement mentioned in Foreign Office letter of the 13th August last in so far as relates to the Tsechow-Taokow Railway.

I am desired to add that it will be within your recollection that the inducement for not pressing our claim for a line to Pukow (our right to which was admitted in principle by Prince Ching, vide my letter dated the 22nd May, 1902) was that the Tsechow- Tackow Railway would receive a guarantee on similar lines to that given to the Russo- Chinese Bank for the Chengting-Taiyuan Railway.

Your Excellency,

I have, &c.

(Signed) THOS. GILBERT, Secretary.

Inclosure 1 in No. 50.

Mr. G. Jamieson to Sir E. Satow.

Shanghae, October 26, 1903. I REGRET to be obliged to have again to invoke your kind assistance in the matter of the guarantee for the Tsechow-Taokow Railway.

On the 14th August I addressed a note to Mr. Townley, asking him to ascertain from the Wai-wu Pu, with whom they desired I should negotiate the terms of the agreement which had just been arranged in principle with Prince Ching, and if with his Excellency Shông Kung Pao to request that they would be pleased to instruct him accordingly, so that I might proceed to Shanghae for the purpose. The reply of the Wai-wu Pu was communicated to me by Mr. Townley on the 17th August, to the effect that they had telegraphed to his Excellency Shêng to say I was proceeding to Shanghae to settle the details of the arrangement for "placing the 'sechow-Taokow line on the same footing as the Chengting-Taiyuan line as agreed to by the Chinese Government," and their Excellencies trusted that I would be able to come to a definite arrangement with his Excellency Shêng.

In pursuance of this understanding, I reached Shanghae on the 6th September and had an interuiew with his Excellency Shêng on the 9th. His Excellency stated that he had received a telegram from the Wai-wu Pu, but did not inform me of its contents. He at once endeavoured to reopen a discussion on the old lines, viz., that we had merely a mineral concession, that we had to build the railway ourselves, the improbability of its paying, the risk the Chinese Government were running, and so on, to which I replied that the question now was not whether there should be a guarantee or not, as that had been settled in Peking, but merely as to its terms, which moreover were to be analogous to what he had recently settled with the Russo-Chinese Bank for the Cheng-Tai line. the same time, I handed him a draft which I had prepared of the proposed agreement based on the Russian terms, together with a memorandum of the cost of the line so far as we had been able to estimate it.

At

success.

A more amicable discussion then followed as to the progress of the Syndicate, its con- stitution, prospects, &c., to all of which I answered frankly. In particular I was pleased to be able to inform him that the Honan coal had been tested on marine boilers with satisfactory results, and that there was good prospect, given friendly treatment on the part of the Chinese Government, that the Syndicate would in time prove a commercial

He promised to look over the draft agreement and let me know. Three weeks elapsed without any reply, and on the 29th September I addressed him a letter pointing out the long delay, and asking what steps he proposed to take. I received a reply a few days afterwards to say that he had nominated a Committee of four Chinese to discuss with me the terms of the agreement. A meeting was held on the 9th October, the Minutes of which I have the honour to inclose. Your Excellency will see that the Chinese members were instructed to bring forward certain propositions to which my consent was asked as a preliminary to entering on a discussion of the agreement. The principal of these was that the Syndicate should make a present to the Chinese Government of 150,000%. in shares as "compensation" for the risk they ran in giving the guarantee, basing the demand on the ground that the traffic would probably be less than that on the Chengting-Taiyuan line.

I pointed out that there was nothing in the Russian Agreement which justified a demand of this sort. The question of the amount of traffic, which after all was a matter of opinion, had not been mentioned at Peking, and did not enter into the case at all. I did not however summarily reject the proposition, because if the Syndicate received certain equivalents in other directions, we probably would not be averse to giving the Chinese Government a direct interest in the success of the enterprise. For one thing, it would be a saving of much time and trouble if we could arrange to have the line taken over at a round sum per mile, and I invited them to ascertain what his Excellency Shêng's views were on this point, and let me know at our next meeting.

More than a fortnight elapsed before I had any farther communication, his Secretary informing me that they were waiting for instructions, and I was again obliged to write to Sheng and press for an explicit reply as to whether he was prepared to go on with the agreement in terms of the Chengting-Taiyuan line or not, as if not, we were simply wasting time, and I should return to Peking. I received no reply, but was informed by his Secretary that another meeting had been called for the 26th October.

This second meeting took place as arranged, and I inclose the Minutes of this also. At this a new difficulty was started, viz., that we proposed to establish ironworks in Shansi, and as these would come into competition with the ironworks at Hanyang, in which his Excellency Shêng had personally embarked large sums, he would, in assisting us to build the railway, he contributing to his own ruin. Consequently, before he went any farther, we must come to some arrangement by which the Hanyang irouworks would be safeguarded in any event. The method by which he proposed to effect this was that we should undertake not to establish ironworks within a term of years, and thirty years was the term suggested.

Your Excellency will see from the Minutes the turn of the discussion, but it ended in one of the members declaring that his Excellency Sheng did not consider himself at all bound by Prince Ching's promise to Mr. Townley, and that he was in effect free to impose any terms he pleased. It was by Sheng's advice that the promise had been made, and the whole conditions had been left to him. He considered the safeguarding of the Hxnyang ironworks a necessary preliminary, and till that was settled he would discuss nothing else. I stated that in that case it was no use attempting to go on, and I must lay the whole case before your Excellency.

I bave gone thus fully into the history of the case, because I think it will be apparent to your Excellency from these facts, that his Excellency Sheng has no intention of con- cluding this agreement if he can possibly help it. Had he shown any willingness to meet our views, the agreement might have been signed by this time, for it took a much shorter time than two months to settle the agreement with the Russo-Chinese Bank, whereas I have not in that time been able even to make a beginning. Had I agreed to a postpone- ment of the ironworks, which however I was quite unable to do, I have no doubt other points equally detrimental to the Syndicate would have been raised in succession, until the agreement, burdened with such terms, would have been worse than vaineless.

I respectfully submit therefore that the Wai-wu Pu be requested either to issue peremptory orders to Sbêng to place the line on the same footing as the Chengting-- Taiyuan line without demanding any compensation or other equivalent from the Syndicate, or else to name some other negotiator with whom I may put myself in communication. I am ready to come to Peking should your Excellency think it desirable, but I shall remain in Shanghae pending receipt of a communication from you.